UPDATE: Catalog Restructuring Expected to Turn Frederick's Around

Frederick's of Hollywood's catalog division is seeking to regain its footing after floundering since the lingerie marketer went from public to private ownership three years ago.

The company -- which announced last week that it filed for Chapter 11 bankruptcy protection -- will restructure its catalog, focusing on updating its creative and getting its house file back on track.

"The division that has had the most problems is the catalog since the company went from public to private," said Danielle Savin, vice president of catalog and Internet marketing at Frederick's. Savin began in that position in October, soon after Linda LoRe replaced Terry Patterson as president/CEO.

Frederick's was bought last week by Wilshire Partners, Newport Beach, CA, from Knightsbridge Capital Corp., Chicago, which had purchased the company three years ago. Prior to that, the marketer was publicly held. Frederick's is worth $66 million.

Frederick's plans to update the catalog's look by generating fashion ideas from labels such as Gucci and Versace in an effort to modernize and add sophistication to its collection of lingerie and women's clothing, Savin said.

"The book is still very sexy, but we've brought it to the 21st century as far as the makeup and the hair. We've gone back to the models that our customers love and look for. We're very trend-forward," Savin said.

Frederick's hired AGA Catalog Marketing & Design, New York, last summer to redesign the catalog's Fall 1999 book. AGA declined to comment since it no longer has the Frederick's of Hollywood account.

The new design made Frederick's more palatable to other catalogers that previously had been uninterested in renting from or exchanging names with the cataloger. But the book's failure was due to lack of testing, Savin said.

"They [the previous marketing staff] put a new book out in our weakest season, without testing, with new models, new photography, and they did not change their prospecting efforts," Savin said. She added that the book was mailed primarily to nonapparel lists, "which didn't make sense."

AGA also designed this year's spring preview book, which was successful with both prospects and customers, according to Savin.

Frederick's has taken the design of its catalog back inhouse in an effort to control costs. The first of two drops of the fall catalog is slated for Sept. 5. The drops will reach a total of 3.5 million mailboxes.

The company also intends to prospect more aggressively in an effort to grow its shrinking house file. In 1997, the catalog's 12-month file consisted of 1 million buyers. By January, it had decreased by roughly half, according to Savin.

"The attrition had to do with constant change of direction," she said. "That had to do with the creative, the product mix."

Before the ownership change three years ago, the company had prospected at 48 percent, and it plans to return to that level, Savin said. Since the company went to private ownership, the percentage fell to 23 percent.

Frederick's catalogs were hitting customers every 12 to 14 days a few years ago, according to Savin. She said the company intends to slow that to every four weeks. Frederick's also was not testing and versioning sufficiently, which Savin plans to change.

"When I came aboard in October, I was shocked by the circulation plan and the overall marketing plan for the catalog [during the past three years]," Savin said.

Frederick's plans to relaunch its Web site in the next few weeks. The company will make changes online and at its more than 200 retail stores nationwide to reflect the creative changes in its catalog.

The merchant said it has received a commitment for new financing, which will be used, subject to bankruptcy court approval, to fund operations and purchase inventory.

The 54-year-old company, which claims to be the first to sell push-up bras and thongs, also announced that it has hired Crossroads LLC, a turnaround management and financial advisory firm.

James Skelton of Crossroads will become chief operating officer and will manage the bankruptcy process. LoRe will remain as president/CEO.

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